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A Model Retirement

If your retirement programs aren’t up to par, or your employees haven’t started saving for their golden years, don’t blame James Parkel.

Parkel, a former board chairman of the Society for Human Resource Management (SHRM), has been preaching the importance of retirement financial planning for two decades—before 401(k)s and other specialized savings plans were common.

James Parkel, president of AARP

And Parkel plans to keep spreading the word from his new bully pulpit as president of the 35-million-member AARP—one of the largest U.S. associations of any type. Based in Washington, D.C., the behemoth nonprofit membership organization provides services, information and advocacy for persons 50 and older. Parkel, previously president-elect for two years, will serve as president until 2004.

In the early 1980s, as a rising HR executive at IBM, Parkel spent time with the gerontology faculty at UCLA, learning that in the 21st century people would be living longer, healthier lives than most people then realized. He foresaw the need for a revolution in retirement planning, not just for IBM but also for the nation.

“Jim was able to articulate all that very early,” before most HR professionals recognized the upcoming demographic changes, says Ken Ranftle, SPHR, who worked for Parkel at Big Blue and later served as SHRM board chairman himself. “He was in the forefront of 401(k)s before they were very popular,” adds Ranftle. “Today we’re reaping some of the rewards of his thinking.”

It was a professional interest that turned into a lifelong pursuit, says Parkel.

IBM “put in IRAs, ESOPs, 401(k)s, everything, in the ’80s,” he recalls, referring to individual retirement accounts and employee stock option plans that were part of the benefits mix. “It started me really liking the topic of aging and retirement planning, and it developed into a passion.” He also helped develop a voluntary early retirement program for the corporation.

Parkel, who has remained active in numerous academic and civic functions since leaving IBM in 1993, doesn’t believe that corporations and HR executives need to do employees’ thinking for them when it comes to retirement planning. A big part of his message is that workers must manage their financial futures as thoroughly as they manage their careers—if not more so.

Making Educated Choices

“Nobody ever told me what would happen in my life’s career,” he told HR Magazine in a recent interview at AARP headquarters. There are lots of factors to consider, lots of tough decisions to make, he notes, and workers must make educated choices in developing a personal financial plan.

People have to decide how aggressive or conservative they want to be in their 401(k) and other investments and make guesses as to how well their company will weather financial storms. And financial planning doesn’t get simpler as you approach retirement age, he adds, citing decisions about whether to start taking Social Security payments at 62 and when to start drawing on 401(k) funds.

That said, Parkel foresees new demographic and workplace changes that might be as revolutionary as the programs that shook up retirement financial planning 20 years ago. This time the phenomenon is the changing nature of work, and how employers and employees view it.

“We’re going to have to redefine the word ‘retirement’ and the word ‘work,’ ” says Parkel. “I technically retired from IBM in 1993, but I have never retired.” Since then he has maintained an often-frantic schedule, serving on the boards of the youth business education organization Junior Achievement and the American Graduate School of International Management (Thunderbird), among other organizations. Plus, he’s the father of three teenagers.

“People think of ‘work’ in the old way that says: ‘I’m in this job in either a service industry, manufacturing, whatever, and so ‘work’ means that I’m going to continue to do that job.’ The difference today is that people can have many options,” he says.

As they approach what many people think of as a retirement age, they don’t have to go abruptly from spending 40-plus hours a week on the job to spending zero. “They may want to volunteer, they may want to work part time, they may want to work at home, they may want to work a combination of all three,” Parkel says. “So there’s a redefinition coming along that I don’t think the HR people and the employers have woken up to.”

Parkel recently elaborated on that scenario at a Conference Board symposium in Chicago, saying it’s time to do “another cafeteria plan” for employee benefits that provides the flexibility demanded by today’s older workers.

“This cafeteria plan is going to be different. A lot of these seniors, if they’re over 65, don’t need the benefit package” that many younger employees expect. “They need some other things” such as top-notch health care, he told attendees.

From Computers to Recruiting

Parkel’s passion for retirement issues, and for HR in general, developed from a somewhat unlikely source: a job as an electrical engineer designing computers for IBM in the early 1960s.

“During the first five years of employment I was asked to do some specialized recruiting and was assigned to the recruiting department,” he recalls. “They wanted to get special engineers, instrumentation engineers, into the process control areas of IBM, and I had a background in that. So I started working in that department, enjoyed it and was assigned a couple times to do university recruiting. Then I wanted to move into it, I enjoyed it so much.”

From the recruiting job he went to an IBM plant in San Jose, Calif., where he served as employment manager. After gaining experience in various HR subject areas, he was sent to Rochester, Minn., as the top HR official there in the early 1970s. He developed expertise in marketing and moved up the HR chain of command, getting help from some heavy hitters.

“I’ve been very lucky,” says Parkel. “The head of HR for IBM [Walt Burdick] had the ability and the vision to work in both HR and the business arena.” Burdick was “my friend and my mentor who brought me along, and he taught me that the higher you went the more you worked in the business arena and not in the program arena.”

But others helped Parkel as well, “key individuals who were the CEOs of some of the units that I ran or worked for where I was the HR person and they were the business person. They brought me into the business part, and that was key.”

Eventually, Parkel took on “all the fiduciary responsibilities” for 400,000 corporate employees—“all the pay and benefits worldwide in the service areas. And that’s what allowed me to start on my love of the retirement planning and aging subjects.”

That love brought him to SHRM in the 1980s, when it was called the American Society for Personnel Administration (ASPA). He became involved with ASPA’s international division, was elected president of it, joined the ASPA board and eventually chaired the board at a crucial time in the organization’s evolution.

Changing the name from ASPA to SHRM was just one of many revisions in the late 1980s. “That’s when we redid all the strategies,” he recalls. SHRM became more staff-driven, more focused on advancing the profession from mechanical to strategic functions.

Michael Losey, SPHR, former SHRM president and CEO, observes that Parkel provided “strategic management leadership” at a time when many associations were slow to recognize the need to operate like a business.

Focus on Workplace Issues

Today, Parkel, who lives in New Fairfield, Conn., continues to focus on emerging workplace issues, such as tax code provisions and other pension-related roadblocks preventing private-sector employees from testing forms of phased retirement that have proved popular in public-sector institutions such as universities.

Another issue looming over today’s workers and retirees: the future of the Social Security system, in particular whether employees should be able to put some of their Social Security contributions into their own investment accounts.

“I think the words ‘privatization’ and ‘individual accounts’ have been lightning rods for many people,” states Parkel. Individual savings accounts won’t hurt Social Security if they are add-on systems, according to Parkel. What really matters is how the plans are designed, “If you say to me: ‘We’re going to take the Social Security system as it is today and carve out money to be put aside in individual accounts,’ we will come to the table ready to disagree with you.”

He’s also concerned about companies that use forced-ranking employee evaluation systems that can have a disproportionate impact on older workers, and AARP has become involved in litigation with some employers. “We have always had zero tolerance on age discrimination,” he states, and AARP has filed and joined lawsuits on age discrimination issues.

In addition, Parkel is keeping an eye on companies that stop paying for promised pensions or health care for their retirees. “Where we believe those are improper, illegal, we will and do aggressively join those cases.”

Perhaps the highest profile legal effort AARP has joined in recent months is a series of suits against major pharmaceutical manufacturers that the association claims are trying to slow or prevent the sale of cheaper, generic versions of some prescription medicines that older Americans need.

“That’s a conscious effort” on AARP’s part, Parkel says. “We believe very strongly that generic drugs, given through prescriptions by physicians and approved through the health system in the United States, are safe.” He says the suits send a clear message that “we agree with competition and we support it.”

Never Too Old to Learn

Parkel’s status as AARP president and longtime HR professional gives him credibility and clout as a speaker. His presentations typically feature a few emphatically delivered points about older workers: “No. 1: They are retrainable. And the fastest-growing demographic for education on the Internet is people over 50.

“No. 2: They are loyal. No. 3: They know how to get to work on time. No. 4: They are a great influence on the younger employees and the other employees in that institution, even if they’re working part time,” he says. “They’re great ambassadors. And their morale is high.”

Even after leaving full-time employment, they often remain active, notes Parkel. “As they continue to get involved, they stay healthier—healthier from a physical standpoint and from a mental standpoint. It helps their whole outlook.”